Facts of the Case

The petitioners, small-scale traders in iron and steel scrap based in a village in Panchmahal district, were duly registered under the GST Acts. Due to financial and personal difficulties, they could not file returns for certain months in 2019, as returns under the GST Act can only be filed after payment of the tax dues shown therein. A show cause notice dated 24.05.2019 was issued proposing cancellation of registration for non-filing of returns. The petitioners explained their financial difficulties, but the registration certificate was cancelled by order dated 10.07.2019, which merely stated “registration is cancelled for want of compliance” without further reasons. The petitioners were not served a physical copy of the order and, due to continuing financial hardship compounded by the Covid-19 pandemic, could not immediately pursue restoration. In July 2021, having arranged funds, they filed a restoration application and, on 06.09.2021, paid all outstanding tax dues by filing the pending returns. The restoration application, treated as an appeal, was dismissed by order dated 14.09.2021 on the ground of being time-barred.

Issues Involved

  1. Whether the limitation period for filing an application for revocation of cancellation of registration stood extended by CBIC Order No.1/2020-Central Tax and the Supreme Court's Covid-19 limitation extension orders.
  2. Whether the writ-applicants were entitled to restoration of their GST registration having paid all outstanding tax dues.

Petitioner's Arguments

  • CBIC Order No.1/2020-Central Tax dated 25.06.2020 extended the time for filing revocation applications, providing that for cancellation orders passed up to 12.06.2020, the limitation would commence from the date of service of the cancellation order or 31.08.2020, whichever is later.
  • This limitation stood further extended by the Supreme Court's order dated 10.01.2022 in Suo Moto Writ Petition (C) No.3 of 2020, which excluded the period from 15.03.2020 to 28.02.2022 for computing limitation in all judicial and quasi-judicial proceedings, with a further 90 days available from 01.03.2022 where limitation would otherwise have expired in that window.
  • The restoration application was filed in July 2021 and the outstanding tax was paid on 06.09.2021 — both events occurring while the Supreme Court's extension order was in operation.
  • Since the sole ground for cancellation was non-filing of returns due to non-payment of tax, and the outstanding tax now stood paid, the cancellation ought to be revoked to allow the petitioners to resume business.

Respondent's Arguments

  • The respondents relied on their affidavit-in-reply.
  • It was urged that the Supreme Court's order extending the period of limitation on account of Covid-19 would not apply to an application for restoration of GST registration.

Court Order/Findings

  • The Court noted that the CBIC had extended the time limit for filing revocation applications, with limitation for orders passed on or before 12.06.2020 effectively commencing from 31.08.2020.
  • Since the restoration application was considered by a quasi-judicial authority, the Supreme Court's Covid-19 limitation extension order applied to it, and the limitation computed under the CBIC order stood correspondingly extended.
  • The restoration application was filed in July 2021, during the period when the Supreme Court's extension order was in operation, and the outstanding tax was paid on 06.09.2021.
  • As the registration was cancelled solely for non-filing of returns on account of non-payment of tax, and that tax now stood paid, the registration deserved to be restored to enable the petitioners to continue their business.
  • The impugned order dated 10.07.2019 cancelling the registration certificate was quashed and set aside, and the respondents were directed to forthwith restore the registration certificate.

Important Clarification

  • Where GST registration is cancelled solely for non-filing of returns caused by non-payment of tax, and the assessee subsequently discharges the outstanding tax liability, the Supreme Court's Covid-19 limitation-extension order in Suo Moto Writ Petition (C) No.3 of 2020 applies to quasi-judicial restoration/revocation proceedings and can save an otherwise time-barred restoration application.

Sections Involved

  • Section 29, CGST Act, 2017 – governs cancellation of registration, including cancellation for non-filing of returns.
  • CBIC Order No.1/2020-Central Tax dated 25.06.2020 – extended time limits for filing applications for revocation of cancellation of registration.
  • Suo Moto Writ Petition (C) No.3 of 2020, Supreme Court of India – extended limitation for judicial and quasi-judicial proceedings during the Covid-19 pandemic.

Decision – In Favour of

The decision is in favour of the Assessee. The cancellation order was quashed and the respondents were directed to restore the registration certificate.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No. 3442 of 2022
  • Coram: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Ms. Justice Nisha M. Thakore
  • Date of Order: 30 March 2022

Link to Download the Order

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